MONTPELIER — A replacement heating plant proposed by the state had some legislators from both chambers in the Statehouse on Friday raising the possibility of canceling the project at the same time the head of the state’s Buildings and General Services Department was stressing the need to pursue the upgrade.

An effort to create a district heating system previously had secured an $8 million Department of Energy grant to help with the project. As part of the plan, the state will replace an existing heating plant behind the Motor Vehicles Department on State Street, allowing the plant to operate boilers that burn wood chips rather than heating oil. But talk of any projected annual savings took a backseat at times in separate legislative committee meetings Friday.

“We’re a prisoner of ... $8 million,” said Sen. Richard Mazza, D-Chittenden-Grand Isle, a comment that prompted Montpelier City Manager William Fraser to suggest the state was getting a good deal for a new heating plant. The city, a partner in the project, will distribute heat to downtown customers via pipes it will install.

Montpelier Mayor John Hollar joined Fraser in discussions with lawmakers on the heating plant.

According to state officials, the estimated cost of the project was $2.58 million more than the funds currently available, but they later said it was fair to characterize the actual shortfall, or budget overrun, as $3.3 million — a revision they acknowledged after being questioned by Rutland County Rep. Charles “Butch” Shaw. To help address the shortfall, state officials have asked for an additional $400,000 in the new capital construction bill, which has yet to be approved.

Rep. Cynthia Browning, a Bennington County Democrat, criticized state officials for the rosier picture they first presented. Browning suggested the reduced number was misleading, and she said she would rather know the full extent of a problem rather than hear a best-case scenario.

The estimated cost of the heating plant for the state as of Friday was $18.36 million, a slight increase from last week’s figure of $18.1 million. That has prompted the state to ask the city of Montpelier to kick in more money to help with the budget overrun. If state officials have their way, the city’s share of the overall project would climb from $563,948 to $623,472.

In explaining the increase from last week’s estimate, state officials blamed a clerical error with one line item.

Buildings and General Services Commissioner Mike Obuchowski said the project had more capacity than needed currently, suggesting that scaling down the project to save money was conceivable. But he also said the state might not know what its needs will be in 10 years.

Sen. Peg Flory, a Rutland County Republican and chairwoman of the Senate Institutions Committee, said some creative solution may be the answer.